Don’t Get Mad, Get Sizzle: How Tech Is Taming Local Programmatic TV

by Wayne Friedman, June 17, 2017

Recently, a media agency looking to make a local TV spot buy in the Jacksonville, Florida market for a client decided to go with Cox Media’s Videa, a local TV programmatic ad technology company, as a big test.

Timing was an important consideration.

Sketching out a media plan, the client wanted specific information for a media buy to start in a month for a campaign running three months. The agency needed details on the buy: programs, TV stations, audience targets, and time periods.

Usually, such information could take the agency a few days — if not a week — to compile. But Videa opened the eyes of the media agency — in a big way. “They got all the information in seven and a half seconds,” says Brad Smith, SVP/CRO, operations of Videa, who declined to go into details about the agency and/or client.

This is the just one promise that programmatic TV operations are trying to make to local TV station sellers — and more importantly — longtime suffering media agencies. Programmatic is part of an efficient automated buying/selling process.

For many, local TV spot buying is still in the dark ages; paper documents and analog planning/ordering efforts for buying local TV advertising still remain.

Smith says Jacksonville is somewhat unique — and could represent the future. That’s because a critical mass of five ad-supported TV stations have access to the same programmatic platform: Videa.

Right now, there are many local TV programmatic services in operation, or will start up, with different operations and  distribution. This list includes WideOrbit, Videology, Videa, ITN Networks, the unwired network, and others.

Media agency executives say they need a standard programmatic platform or structure where agencies can easily buy multiple stations in a single market.

Five TV stations in one market may not necessarily be the magic number for everyone. Videa’s Smith says it could be a little as three stations — all to give local TV station marketers the chance to gain scale.

One media buying executive is looking for more, but will take somewhat less. “We want to have 100% coverage to be able to do this,” says Frank Friedman, president, local investment of Publicis Media, in speaking about the future of programmatic services for local TV stations.

“In the markets where we have had this — or are pretty close — we have done remarkably well,” he adds. While not confirming any specifics, Friedman adds: “We did a test with them [Videa] and we were very pleased.”

There is still a long way to go in the local TV programmatic space for any seller. Videa, for example, has its programmatic platform on 290 stations covering 44 million TV homes.

But media analysts point out that would only access one-third of the country. Currently, there around 1,350 ad-supported U.S. TV stations, reaching 118.4 million TV homes.

Many local TV programmatic ad-tech players have the same challenge: How to build scale among TV stations for a easily accessible system? And that is just one part of the problem. Brad Adgate, veteran media analyst/consultant says: “The big part of this is that local TV has measurement is terrible. If you start moving to getting return path data and qualitative marketing, marketers would look more closely at local TV.”

Media buyers say the current Nielsen system — although improving — still has major issues when it comes Nielsen’s legacy viewer measuring paper-diary system for many markets. “And we are still transacting in paper,” asks Friedman. That advertising business for TV stations is roughly $20 billion a year.

Both Adgate and Friedman believe a better system is one based on set-top boxes. comScore/Rentrak has a growing service using data from set-top boxes that many TV stations have adopted over the last few years.

Adgate says with new set-top box data “you are not going to get volatility” for local TV metrics that occurs with Nielsen’s paper-diary markets. At present, there is a scale issue. Adgate says: “Not everyone subscribes to Rentrak or uses its as a currency.”

Friedman says in those markets with set-top box data there has been improvements. “We are a firm believer that set-top box is the way to go, as far as currency goes… we are doing every we can to move to that.” Ultimately, he believes those who holding the local TV advertising money will need to set some terms:

“All it is going to take is a couple of holding company groups — we will one of them — to push and hold the standard of how we are going to transact in the future… There has to be a give and take on both sides.”

Another major issue for TV station and advertisers — transparency. Not all programmatic TV platforms offer specifics of exactly where and when their advertising is running. And if they do, it isn’t timely.

Videa’s Smith has said: “Transparency isn’t transparency if you can only see backwards. You have to know what you are buying going in and to easily reconcile that at the end of the day. Understanding where your spots are running exactly, as well as reach, frequency, and over-indexing [issues].”

Mitch Oscar, EVP of programmatic strategy of U.S. International Media, says transparency can be murky for local TV marketers — especially with some local TV programmatic platforms geared to quick and short-term media deals. “This can tricky. For some platforms you are putting out a bid. For example, you say, ‘I’ll pay $500 [for this spot]’. But whoever accepts it, you are stuck. You own the spot.”

Additionally, he says, some local TV programmatic operations, WideOrbit, for example, only offers guarantees on unit costs — not on impressions. On the positive side, Oscar says, WideOrbit does have perhaps the widest general distribution with more TV stations than other operations.

TV media-buying executives also are concerned about the quality of local TV inventory available, many believing leery TV stations will continue to offer up remnant, overnight or other lesser-quality TV inventory.  Smith notes: “This isn’t about low value inventory…  it’s about driving value to both sides.”

Friedman agrees: “This is not to get just the lowest unit rates. There are two parts to this: Cost efficiency, being one. The other: How do we process it more efficiently.”

TV stations need to get into the programmatic game. Platforms from new digital media publishers are viewed as growing competitors to TV stations.

Around than half of all digital video ad spending in the U.S — totaling $9.13 billion — is programmatic, says eMarketer. By 2018, nearly three-quarters of all video ad dollars — will transact programmatically.

Rick Ducey, managing director of media consultancy of BIA/Kelsey, has said: “Once these things get connected, we can go for low single digits [share] to the majority of [local TV] spot trading being programmatic by 2020.” He says up to 50% of the marketplace could be programmatically.

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